Giving spouse a fair share

stamp duty payable calculated, and where do you get the transfer form

stamped?

* Transferring shares to your wife does not involve a capital gains

tax liability, as the shares will be deemed to have been transferred at

a value which produces neither gain nor loss. You are entitled to add

the appropriate indexation allowance to the cost of your shares, and it

is that increased value that your wife will take as her tax cost.

On any subsequent disposal by her, further indexation is due from the

date of transfer to the date of sale. In the meantime, you should

include details of the transfer when completing your annual tax return.

There is no stamp duty payable on the shares being gifted to your

wife. It is sufficient for you to complete the appropriate sections of

the stock transfer forms which should be signed by both of you. These

should then be sent to the company registrars.

* I have inherited about #85,000, mainly in cash, though there are a

couple of small shareholdings in BT and Royal Bank of Scotland. I would

welcome your advice on how to make the best use of this money.

I am 53, and hope to be able to carry on working until I am 65 when I

would be entitled to a maximum two-thirds of salary pension. My mortgage

will be paid off in two years with possibly a small surplus from my

endowment policy.

At this stage I do not need any income from my capital, which I would

like to grow for me between now and my retirement. A family friend who

is in the insurance business has recommended that I invest #25,000 in

each of three distribution bonds, and deposit the remaining #10,000 in a

high income account with a building society in my wife's name as she has

no taxable income of her own.

Is this a good approach or would I be better trying something else?

From my own resources I have built up a portfolio of half-a-dozen unit

trusts, worth about #17,000 at last count, and also have the maximum in

an Abbey National Tessa account.

* Insurance bonds are widely recommended to investors who would often

be better served by other vehicles. Such bonds have a poorer record than

either unit or investment trusts. When an investor is seeking capital

growth it is doubly inappropriate to put money into distribution bonds,

which are designed to provide income.

Moreover, it makes no sense at all to invest capital in lumps as large

as #25,000, given the funds, totalling around #110,000, that you have at

your disposal. A much wider spread is desirable.

We would strongly advise you to reject the advice of your family

friend, and seek an independent opinion.

Capital growth is most likely to result from long-term investment in

equity-type investments, such as company shares like your BT and Royal

Bank of Scotland holdings, or through investment and unit trusts, which

themselves have their own equity portfolios.

In your case, you have more than enough time between now and your

expected retirement date for such investments to fructify and provide

you with a valuable nest egg from which you can start to take an income

when you are no longer working.

Between your inheritance and your own savings, you have sufficient

capital to fund a portfolio of your own. This could include your unit

trust holdings and some investment trusts, but there is also plenty of

scope for further investment in conventional shares. You have the

resources to give a decent spread across sectors.

Accordingly, we would advise you to consult a stockbroker. He or she

will review your existing investments and make fresh recommendations for

the additional capital. If you do not have the name of a suitable

broker, you can obtain a list of Scottish stockbrokers from the Stock

Exchange in Glasgow.

It is always wise to have some cash at your disposal. You should

certainly keep your Tessa going meantime, and perhaps go ahead with the

plan to put #10,000 cash on deposit in your wife's name.

It is worth bearing in mind, however, that a better return could be

obtained from Government stock than building society deposits, and your

wife would be able to reclaim the tax on the gilt dividends. This would

also be a matter for discussion with a stockbroker.

* I paid in advance for my gas and electricity to cover the period

April 1, 1994 to March 31, 1995 to save paying VAT at 8%. Is there a

loophole in the legislation to save me paying VAT in the following year?

* Unfortunately not. Any payments made subsequent to the imposition of

VAT attracted the tax. It might have been possible to avoid another

chunk of VAT if the rate was to be subsequently raised to the standard

17.5%, but the Government backed down on this in the face of the barrage

of criticism and the rate stays at 8%.

* I have held Tribune Investment Trust shares since the early

seventies and could check the movements in the investment trust column

in the newspaper share lists -- just a few items from the end. Now this

seems to have been taken up by ''Turkey''. Your comments on this change

would be appreciated.

* You don't need to worry, Tribune Investment Trust has not changed

from being an international trust to a narrow specialist concentrating

on the volatile Turkish stock market. It has merely changed its name to

Baring Tribune Investment Trust, to reflect the management stable it is

part of.

While not among the leaders, Baring Tribune has an average track

record within its peer group.

* We have recently retired early, myself aged 56 and my husband at 61.

I have a General Accident Kaleidoscope policy taken out in December

1988. The monthly premium is #120. It is 100% in General Accident's

managed fund and the life insurance benefit is #1200.

As at November 22 the surrender value was #8416, but this figure

cannot be guaranteed due to fluctuations in the stock market. I would

have hoped for a better return after six years. I can reduce the

premiums to #12 per month, and cash in the policy at the tenth

anniversary, or take the surrender value which does not equal the

payments made.

As our circumstances have changed it would require using savings to

meet the #120 per month payment and this seems unwise.

* This is indeed a disappointing surrender value. If you can, it would

be better to reduce the payment to the minimum and wait for the tenth

anniversary of the policy, when the payout should hopefully be not

unreasonable -- the track record of the fund is in line with the average

for its sector.

* I currently have money invested in a capital investment bond to the

sum of #18,000. In January 1994 the price was 174p. It is now 158p.

Would this money perform better in an investment trust?

* Given that over the past year the UK stock market, as measured by

the All-Share index, has fallen by 12%, then the 9% drop recorded by

your bond is not bad at all. The outlook for shares this year is more

positive, and there is no guarantee an investment trust would perform

better, so you should stick with your bond.

* My sister owns two properties and also has fairly substantial stock

exchange investments accumulated over a number of years. I am the sole

beneficiary of her estate and she has suggested that, as she is

terminally ill, she should gift the assets to me now to reduce the tax

which would eventually be payable on her estate. Can you confirm that

there are no disadvantages to this please?

* There is unlikely to be any tax benefit to be obtained by

transferring the assets now, as if your sister dies within three years

of making the gifts the inheritance tax liability on death would remain

unchanged. Although the gifts would be potentially exempt transfers,

these do not fall out of account until seven years from the date of

gift, although only a proportion of the full tax would be payable if

death occurs more than three years from the date of gift.

Your sister should, however, take advantage of the time remaining to

her in utilising her annual inheritance tax exemption of #3000. If she

has not already used the 1993/94 exemption, a total of #6000 could be

gifted before April 5, and a further #3000 on April 6.